The reason for Apple’s $3.2 billion interest in Beats? Spotify

“Why would Apple want to buy Beats Electronics?” Sam Gustin writes for TIME Magazine. “It’s a question many tech observers have been asking since the Financial Times reported Thursday that the Silicon Valley behemoth is ‘closing in’ on a $3.2 billion acquisition of the ‘high quality’ headphones maker founded by music producer Jimmy Iovine and hip-hop artist Dr. Dre.”

“Apple’s iTunes service long dominated digital music sales, but the company never quite figured out how to present a streaming music product. Apple’s flagship music brand iTunes has been criticized over its user interface — so it makes sense that the company would be eager for outside help,” Gustin writes. “At $3.2 billion, the Beats deal would be more than three times larger than any acquisition in Apple’s history.”

“For Apple, the streaming music service that Beats recently launched may be the most attractive part of the deal. Apple revolutionized digital music with the iPod and iTunes, but the company has yet to find a new formula to challenge Spotify, the streaming music darling of the moment,” Gustin writes. “‘This is a reactive move — at best,’ writes veteran tech journalist Om Malik. ‘Steve Jobs’ Apple would have pushed to make something better, but even he struggled to come to terms with the Internet and Internet thinking. That hasn’t changed.'”

“Subscription services are growing faster than any other area of the music industry. Music subscription revenue increased by 50% to $1.1 billion in 2013, according to a report by IFPI, the global music industry association, cited by my colleague Eliana Dockterman. Downloads fell 2% last year, in the first annual decline since Apple launched the iTunes store in 2003,” Gustin writes. “This situation raises a now-familiar question: What’s up with innovation inside Apple?”

Read more in the full article here.

MacDailyNews Take: The following video, “Dr Dre On His Way To Being The First Hip Hop Billionaire: Dre & Tyrese Announce Apple Buying Beats For $3.2 Billion,” contains language that may not be safe for work (NSFW), depending on where you work:

Related articles:
If Apple’s really buying Beats, here’s hoping it’s brilliant in a way which isn’t immediately obvious – May 9, 2014
The reason for Apple’s $3.2 billion interest in Beats? Spotify – May 9, 2014
Apple buying Beats Electronics: Its best idea since the iPad? – May 9, 2014
Why would Apple want to blow $3.2 billion on Beats Electronics? – May 8, 2014
Apple in talks to buy Beats Electronics for $3.2 billion – May 8, 2014

32 Comments

  1. the only way this makes sense is if this is a clever way for Tim to siphon billions of dollars from Apple with Tim getting a huge three BILLION dollar kickback from Beats. Dre and Jimmy get to keep the .2

    see! everyone thought Tim was timid. He’s gagnsta all the way

  2. Hip-hop-old-pop. He’s tried this kind of thing before. Seems like another opportunist publicity stunt to make another million— or billion. 10 years ago there was an interview with Doc Dre in Fortune or somewhere, around the time of U2 iPod, saying he’s been hobnobbing with Apple, rapping with Steve about an Apple Beats inspired headset or something. Its in the archives somewhere. Maybe he’s hoping Google are stupid and desperate enough to swoop in and hand him $4 billion bucks to clinch the supposed deal. Like the world is bored and tired with iTunes and needs an exciting subscription service like his.

  3. DUDE, APPLE BEATS – SAY IT LOUD! put an emphasis on the word BEATZZZZZZ and drag it out… APPLE BEATZZZZZZZZZZZ.

    I wonder if they will take the Beats out of HP and HTC products. The only thing I have ever been jealous of a PC about was BEATS built in.

    Just a little red ring on the headphone jack of the iPhone could signify Apple BEATZZZZZZZZ, and boom – there’s extra value in that them there iPhone pushing it past 60 million units per quarter.

    All you all who don’t understand this brilliant brand mashup just don’t get how perfect they go together.

    My one caveat – I remember Steve being so proud of that black speaker system with just a volume knob – that product didn’t take off, and really put Apple of audio gear. My clear apple speakers that were powered off the G4’s speaker amp were DOPE. Apple should def. get back into audio equip.

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